off-the-wire

UPDATE 1-Hungary's inflation could slow further, open room for rate cuts -minister

Kitco Media
By Reuters
Published:
Updated:
Reuters
(Adds comments, background) BUDAPEST, March 14 (Reuters) - Hungary's inflation rate could slow more sharply in coming months and drop to around 9% by the end of the year, potentially paving the way for interest rate cuts, business news site vg.hu cited the economy minister as saying on Tuesday. Minister for Economic Development Marton Nagy said the government was committed to curbing inflation to single-digits by the end of 2023, from an annual rate of 25.4% in February. The minister, who is a leading advisor to Prime Minister Viktor Orban, again flagged the possibility of interest rate cuts, after Orban said last week that the National Bank of Hungary's (NBH) reductions to money supply were too drastic as inflation has probably peaked.


"Declining inflation could also open the room for a reduction in central bank and market interest rates," Nagy said
in an interview with vg.hu. A policy clash between Orban, who has ruled Hungary since 2010, and NBH Governor Gyorgy Matolcsy, once dubbed by Orban as his "right hand," came to the fore last Wednesday when the central bank chief voiced new criticism of the prime minister's handling of the inflation crisis.


Hungarian inflation slowed in February for the first time since the middle of 2021, although only by a touch as the headline rate stayed above 25%, giving no relief yet to a central bank maintaining a hawkish policy. On Feb. 28 the NBH left interest rates unchanged at the European Union's highest level. It said it would tighten liquidity conditions further, defying the pressure to cut borrowing costs while the economy slows sharply. (Reporting by Krisztina Than; Editing by Susan Fenton)

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